IOC losing Rs 237 crore per day on subsidized fuel

New Delhi: State-owned Indian Oil Corp (IOC) is losing a record Rs 237 crore per day on selling auto and cooking fuel below cost as government continues to bar it from raising rates in line with spurt in raw material cost.

“The spike in global prices has widened the gap between the retail selling price and their cost,” an IOC official said.

IOC, and its public sector retailers Hindustan Petroleum and Bharat Petroleum, are losing a whooping Rs 10.74 per litre on diesel, the highest ever.

Besides diesel, the three firms are losing Rs 21.60 on every litre of kerosene and Rs 356.07 per 14.2-kg on LPG cylinder.

“The industry as a whole is losing about Rs 430 crore per day,” he said.

Petroleum minister S Jaipal Reddy had earlier this week ruled out any increase in fuel prices despite crude oil prices touching a two-year high of $100 per barrel.

For the full 2010-11 fiscal, the three are projected to lose Rs 76.559 crore in revenues at current prices, the official said, adding that IOC alone is projected to lose Rs 42,233 crore in revenues.

The official said IOC is losing Rs 136 crore per day on diesel sales, Rs 47 crore on kerosene and Rs 54 crore a day on LPG sales.

In addition, they suffer a loss of about Rs 2.50 per litre on petrol sales, even though prices were freed from the government control in June 2010.

If prices are not hiked, the government will have to come up with other ways to compensate the oil marketing companies for their losses.

The petroleum ministry wants the finance ministry to compensate the oil companies in cash for at least half of their under-recoveries by making adequate provisions in the Budget.

Upstream oil firms like Oil and Natural Gas Corp will shoulder one-third of the burden.

For the first nine months, the finance ministry has approved the release of a cash compensation of Rs 21,000 crore to the three state-run fuel retailers.